Driving Profits with Net Promoter Score®

Profits result from increasing customer loyalty!

Customer satisfaction and loyalty are critical to corporate success, yet most customer satisfaction research is too long, complex and yield results that are seldom translated into actions. 

Leveraging the concept of Net Promoter Score ® documented in “The Ultimate Question” by Fred Reichheld, Consumer Contact provides a cost effective way to measure, track and increase the level of customer equity for any organization.

Net Promoter Scores® identify the customers who are promoting your firm while simultaneously highlighting opportunities for operational improvements, resulting in increased sales and stronger profits for the entire enterprise.

Dissatisfied customers are happy to share a story about a poor customer experience. Their experience may have been less than they expected and they end up feeling misled, mistreated, ignored, or coerced. Dissatisfied customers do not create value for the organization. In fact, negative customers will detract from the image and reputation of the company and will actively dissuade others from using the products or services of the company. Dissatisfied customers erode the value of the company.

Satisfied customers are delighted customers. Their customer experience may have exceeded their expectations. They are happy and willing to come back for more. They tell their friends and colleagues about their positive experience. They are more than willing to do business with the company. Satisfied customers promote new business and add value to the company.

Dissatisfied customers become Detractors. Highly Satisfied customers become Promoters.

Customers must be satisfied to recommend! 

Measuring this Net Promoter Score effectively represents the customer equity in a firm.   

Identifying the Promoters

A single, simple research question can be used to identify Detractors and Promoters:

 
How likely is it that you would recommend our company to friends, family or colleagues?

 
Analysis shows that sustained value creators—companies that achieve long-term profitable growth—have Net Promoter Scores two times higher than the average company. Leaders outgrow their competitors in most industries by an average of 2.5 times.

Calculating the Net Promoter Score®

The measure of the efficiency of a company’s growth engine is to take the percentage of customers who are promoters (P) and subtract the percentage who are detractors (D).

(Based on "The Ultimate Question" by Fred Reichheld, Harvard Business School Press, 2006.)

With Net Promoter Score, customers can be divided into three value categories.

High Value

"Promoters" are loyal enthusiasts who keep buying from a company and urge their friends to do the same.

Medium Value

"Passives" are satisfied but unenthusiastic customers who can be easily wooed by the competition.

Low Value

“Detractors" are unhappy customers trapped in a bad relationship. They may dissuade their friends from using the company.

Promoters are High Value Customers!

• Promoters can add economic value to the customer base
• Detractors can reduce the value of the customer base
• Promoters increase their purchases more rapidly than detractors, bring in new customers and are more willing to try new offers/products
• Promoters are less price-sensitive than other customers, resulting in more spending and higher invoice value
• Promoters defect at a lower rate than detractors so the company will spend less to keep or replace them

  With Net Promoter Score you drive profit by understanding what makes promoters and repeating it, while addressing the issues of the dissatisfied customers and fixing them.  The result is an operational model to drive ongoing improvement across the company.

 For a complete explanation of The Net Promoter Score, refer to:

"The Ultimate Question" by Fred Reichheld, Harvard Business School Press, 2006.

Net Promoter is a registered trademark of Satmetrix Systems Inc., Bain & Company and Fred Reichheld.